Financial News

Campaigners Call For 'Staycation' Tax Cut

Campaigners fighting for a reduction in VAT for the tourism industry say it could offer the UK economy a £4bn boost.

The popularity of domestic holidays, or 'staycations' has been fuelled by the recession.

In fact a recent survey by Barclays projects that they may be worth over £108bn to the UK economy by 2017, and that our spend on holidays at home will increase by 25% over the next four years.

But tourism chiefs say the UK isn't competing on a level playing field with the rest of Europe.

In France, Germany, Spain and Italy, VAT paid by tourists is set at 7 or 10%. Here it's 20%.

Cuts in the rates in Europe have shown to be successful, and those campaigning for the same to happen here say a cut to 5% would boost investment, jobs and visitor numbers.

Patrick Dempsey, managing director of Whitbread Hotels and Restaurants, said: "We fully support the initiative to cut tourism tax. A cut would deliver a huge financial boost for tourism around the UK and 120,000 new jobs with 8,000 already being created by Premier Inn by 2018."

Another report shows that the UK is ranked 138 out of 140 countries for price competitiveness, and is one of only four countries in the EU not to reduce tourism VAT.

Graham Wason, chairman of the Cut Tourism VAT Campaign, said: "This new research is the economic proof the Treasury has asked for to prove what every other country in Europe knows - that cutting VAT on holidays is profitable for governments.

"Many of our coastal towns are ignored but cutting VAT would help them thrive. More than 60 cross-party MPs have signed our parliamentary motion and more than 1,000 companies and groups are backing the campaign."

But there is little sun on the horizon from the Government.

The Treasury told Sky News in a statement: "The Government recognises the importance of the tourism and hospitality industry, and is providing additional support to businesses in a number of ways.

"For example, from April 2014 businesses and charities have been able to benefit from up to £2,000 off their employer national insurance contributions bill and over £1bn of business rates support has been provided, benefiting all ratepayers.

"While we keep all taxes under review, we do not have any plans to introduce a VAT cut for the tourism sector."

The campaigners won't be deterred, and say they will continue to lobby the Government for the same breaks that their European rivals are getting.